Government flips on ASIC levy for charities

By Denis Moriarty, Group Managing Director, Our Community

UPDATE: Credit where credit is due. After a chorus of universal outrage the government has now seen the light and exempted charities from the ASIC levy. Have they learned their lesson? Will they now acknowledge that charities are a vital Australian resource that ought to be encouraged rather than a gang of leftie grifters out to con the public? Here’s hoping. Watch this space….

What we'd said about the earlier proposal

The Australian government apparently wants Australians to pay close scrutiny to the ways in which the nation's charity sector law is a confusing and counterproductive mishmash of pointless complication. If the government ever thinks you're in danger of forgetting, in fact, they send somebody round to kick you hard in the head to regain your attention. Just now, to come to cases, they're imposing a $320 per year levy on charities that are also companies, on the grounds that those ones are registered with ASIC as well as with the ACNC.

This makes no sense at all. ASIC doesn't have any actual responsibilities for regulating companies that are charities - they've passed that job to the ACNC, along with any associated costs. The levy is simple extortion.

If the government actually liked not-for-profits, rather than seeing them as annoying grit in the gears of the juggernaut, it would simply exempt the charities caught up in this.

Headlines like "Australian charities pay the price with new ASIC levy", though, are way too broad.

Only about 12% of NFPs are charities, and only about 12% of those are companies. Most charities are state-regulated incorporated associations, or even unincorporated associations, and they won't have to pay. Neither will trusts, or cooperatives, or statutory authorities.

And while I don't want to see everybody suffer just to make things tidy, this inequality of impact does mean that once again Australian organisations doing identical good things for identical good reasons will be treated entirely differently just because of a legal formality that means nothing to them at any other point in their existence.

It's all rather like section 44 of the Constitution, when you come to think of it - the one that's been randomly bouncing MPs out of their seats on the basis of their parents' citizenship. Someone took a decision 20 or 50 or 100 years ago, everybody got on with their lives, and then out of a clear blue sky a legal quibble hits you like a thunderbolt.

You'd think that the Parliament would be a bit more sympathetic to the sector's complaints, all things considered, given their own problems with the hangover of inappropriate English laws. You might even hope that somebody up there in Canberra would want to fix the underlying problem, which is that the whole not-for-profit sector is staked out directly over the yawning rifts in the Australian federal system.

Companies are national, charities are national, associations are state-by-state, and how hard can it possibly be to agree that what Australia needs is one single authority covering not-forprofits, one single regulator, and one single legal form? Let's finally struggle out of this viscous bog. Have the states hand over their powers to the Commonwealth, as they've done in other areas. Sort out tax on the basis of what you do, not what you are.

Here at Our Community we're often asked whether prospective not-for-profit community groups should start up as companies or as incorporated associations. For small groups, the decision has now become much simpler: stay as far away from the feds as possible. Is that really what the government wants?